California employment regulations reach further than federal law at almost every stage of the employment relationship, from what you can ask a job applicant to what you owe a worker on their last day. The statewide minimum wage sits at $16.90 per hour as of January 1, 2026, with higher industry floors for fast-food and healthcare work, and the rules governing classification, breaks, leave, safety, and separation carry penalties that add up quickly. This guide walks through the compliance obligations that apply to most private employers in the state.
Hiring Rules That Differ From Federal Law
California adds several layers to the hiring process that catch multi-state employers off guard.
Criminal History and the Fair Chance Act
If you have five or more employees, you cannot ask about an applicant’s criminal history before making a conditional job offer.1California Civil Rights Department. Fair Chance Act FAQ If a post-offer background check turns up a conviction and you want to rescind, you first have to conduct an individualized assessment weighing the nature of the offense, how much time has passed, and the job’s duties, then give the applicant a chance to respond before making a final decision.
Pay Scale Posting and Salary History
Employers with 15 or more employees must include the pay scale in every job posting, including those handled by third-party recruiters.2California Legislative Information. California Senate Bill 1162 – Employment: Salaries and Wages Separately, no employer of any size may ask about an applicant’s prior compensation or benefits history.3Department of Industrial Relations. California Equal Pay Act An applicant can volunteer that information, but you cannot solicit it.
Credit Checks
Pulling a consumer credit report on an applicant or employee is prohibited unless the position fits a narrow list of exceptions: managerial roles under the executive exemption, law enforcement, jobs with regular access to bank account numbers combined with Social Security numbers and dates of birth, roles with signing authority or the ability to transfer money on the employer’s behalf, positions with access to trade secrets, and jobs involving regular access to $10,000 or more in cash during a workday.4California Legislative Information. California Labor Code 1024.5 Outside those categories, a credit check exposes you to liability.
Non-Compete Agreements
Non-competes are void in California. SB 699 bars employers from even attempting to enforce one, regardless of where the contract was signed or the employment took place, and entering into a contract that contains a void non-compete is itself a civil violation the affected worker can sue over for damages and attorney’s fees.5California Legislative Information. California SB 699 – Contracts in Restraint of Trade AB 1076 required employers to notify current and certain former employees by February 14, 2024, that any existing non-compete clauses in their contracts are unenforceable, and failure to send that notice constitutes unfair competition.6California Department of Justice. Attorney General Bonta Issues Consumer Alert Reminding California Workers Their Non-Compete Agreements Are Void
Immigration Enforcement at Your Workplace
The California Immigrant Worker Protection Act bars you from voluntarily letting federal immigration agents into non-public work areas or giving them access to employee records without a judicial warrant or subpoena. There is an exception for I-9 forms requested through a formal Notice of Inspection under federal law.7California Department of Justice. Immigrant Worker Protection Act (Assembly Bill 450) Frequently Asked Questions Failing to post the required workplace notices about these rights carries civil penalties of $2,000 to $5,000 for a first violation and $5,000 to $10,000 for subsequent ones.8California Legislative Information. California Labor Code 90.2 You still must comply with federal I-9 requirements, but you cannot use verification in a discriminatory way, such as demanding extra documents from a worker who already presented valid identification.9U.S. Citizenship and Immigration Services. Form I-9 Acceptable Documents
Classifying Workers: The ABC Test
Assembly Bill 5 codified the ABC test, which presumes every worker is an employee unless the hiring entity can prove all three of the following: the worker is free from the company’s control over how the work is performed, the work falls outside the company’s usual business operations, and the worker independently operates their own trade or business of the same nature.10Department of Industrial Relations. Independent Contractor Versus Employee Fail any one prong and the worker is an employee for wages, overtime, unemployment insurance, and workers’ compensation purposes.
Proposition 22 carved out app-based rideshare and delivery drivers, classifying them as independent contractors if the company meets conditions like not prescribing specific work schedules or requiring acceptance of particular service requests.11California Secretary of State. California Proposition 22 – Protect App-Based Drivers and Services Act The California Supreme Court unanimously upheld it in July 2024. For every other industry, the ABC test governs, and the Employment Development Department audits businesses for payroll tax compliance. Misclassification exposes you to unpaid payroll taxes, retroactive benefits, and penalties.
Wages, Hours, and Pay Statements
Minimum Wage Floors
The statewide minimum wage is $16.90 per hour as of January 1, 2026, and adjusts annually for inflation. Two industry-specific floors sit above that. Fast-food restaurant employees covered under AB 1228 must earn at least $20.00 per hour.12Department of Industrial Relations. Minimum Wage Healthcare workers follow a tiered schedule that varies by facility type: large hospital systems and dialysis clinics pay $24.00 per hour from July 2025 through June 2026, rising to $25.00 in July 2026, while other covered healthcare facilities range from $18.63 to $24.00 during the same period.13Department of Industrial Relations. Health Care Worker Minimum Wage Frequently Asked Questions Many cities set their own higher rates, so check the local ordinance for each work location.
Daily and Weekly Overtime
California calculates overtime on both a daily and weekly basis. Non-exempt employees earn 1.5 times their regular rate for hours beyond eight in a day or beyond 40 in a workweek. Hours beyond 12 in a single day trigger double the regular rate, as do hours beyond eight on the seventh consecutive day worked in a workweek.14Department of Industrial Relations. FAQ – Overtime Employers used to the federal weekly-only rule miss this constantly.
Paid Sick Leave
Every employer must provide at least five days or 40 hours of paid sick leave per year. Employees accrue leave at a minimum rate of one hour for every 30 hours worked, starting from their first day, and can begin using it after their 90th day of employment. You can frontload the full 40 hours at the start of each year instead of tracking accrual. Accrued unused sick leave carries over, though you can cap total accrual at 80 hours and limit annual usage to 40 hours.15California Legislative Information. California Labor Code 246 Some local ordinances require more.
Wage Statements
Every pay period, you must give each employee an itemized written wage statement showing gross wages, total hours worked, all deductions, net wages, pay period dates, applicable hourly rates with hours worked at each rate, and the employer’s legal name and address.16California Legislative Information. California Labor Code 226 Missing even one required element can trigger statutory penalties.
Final Pay Deadlines
When you terminate an employee, all wages including accrued vacation must be paid at the time of termination. An employee who quits without notice must receive final wages within 72 hours; one who gives at least 72 hours’ notice must be paid on their last day. Miss those deadlines and you owe waiting-time penalties equal to the employee’s daily pay for each day wages remain unpaid, up to 30 days.17Department of Industrial Relations. Paydays, Pay Periods, and the Final Wages
Meal and Rest Breaks
Non-exempt employees who work more than five hours must receive a 30-minute unpaid, duty-free meal break. A second 30-minute meal break kicks in for shifts exceeding ten hours.18Department of Industrial Relations. Division of Labor Standards Enforcement – Meal Periods Employees cannot handle any work during these breaks.
Rest breaks run separately: 10 paid minutes for every four hours worked, taken as close to the middle of the work period as practical, and never combined with meal breaks. If you fail to provide a required meal or rest break, you owe the employee one additional hour of pay at their regular rate for that workday. The penalty applies once per type of missed break per day, not per individual break missed.19Department of Industrial Relations. Rest Periods/Lactation Accommodation
Discrimination, Harassment, and Training
FEHA Protected Categories
The Fair Employment and Housing Act covers employers with five or more employees and prohibits discrimination based on race, color, national origin, ancestry, religion, age (40 and older), disability, sex, gender, sexual orientation, gender identity, gender expression, medical condition, genetic information, marital status, military or veteran status, and reproductive health decisions.20California Civil Rights Department. Employment Discrimination That list runs broader than federal Title VII. You must provide reasonable accommodations for disabilities and pregnancy-related conditions unless doing so would impose an undue hardship.
CROWN Act
FEHA’s definition of “race” explicitly includes traits historically associated with race, including hair texture and protective hairstyles like braids, locs, and twists.21California Legislative Information. California Government Code 12926 Facially neutral grooming policies that disproportionately affect people of color can violate the law. You can still require hair to be secured for legitimate safety or hygiene reasons, but blanket bans on natural hairstyles are off limits.
Harassment Prevention Training
Employers with five or more employees must provide sexual harassment prevention training on a two-year cycle. Supervisors need two hours; non-supervisory employees need one hour. New supervisors must complete training within six months of assuming the role, and new non-supervisory hires within six months of start date.22Civil Rights Department. Sexual Harassment Prevention Training Information For Employers You are also responsible for preventing harassment by non-employees such as clients or vendors. Workers can file complaints with the California Civil Rights Department, which may investigate and pursue legal action on their behalf.23California Civil Rights Department. Complaint Process
Cal/OSHA and the Written Safety Program
Every California employer must maintain a written Injury and Illness Prevention Program. It has been required by law since 1991 and is not optional. The program must include nine specific elements: a designated person responsible for implementation, a system for ensuring employees follow safe work practices, a method for communicating with employees about hazards in a language they understand, procedures for identifying and evaluating workplace hazards, procedures for investigating injuries or illnesses, procedures for correcting unsafe conditions, employee training, employee access to the written program, and recordkeeping.24Division of Occupational Safety and Health (Cal/OSHA). Developing Your Workplace Injury and Illness Prevention Program
Cal/OSHA enforces the requirement and conducts inspections. California standards are frequently stricter than federal OSHA, particularly around heat illness prevention, wildfire smoke exposure, and workplace violence prevention in healthcare. Having the written program on paper is not enough; Cal/OSHA expects to see you actually following it.
Workers’ Compensation and Payroll Taxes
Workers’ Comp Coverage
Every California employer with one or more employees must carry workers’ compensation insurance, and employees cannot be asked to contribute toward the premium.25Division of Workers’ Compensation. Answers to Frequently Asked Questions About Workers’ Compensation for Employers Operating without coverage is a criminal misdemeanor. A first conviction carries up to one year in county jail, a fine of at least $10,000 or double the premium that should have been paid (whichever is greater), or both. A second or subsequent conviction raises the minimum fine to $50,000 or triple the unpaid premium.26California Legislative Information. California Labor Code 3700.5 You must also post the workers’ comp notice to employees; failing to post it can carry a civil penalty of up to $7,000.
Employment Development Department Obligations
You must register with the Employment Development Department and electronically file tax returns, wage reports, and payroll tax deposits. The employer-side obligations for 2026:
- Unemployment Insurance is employer-paid on the first $7,000 of each employee’s wages. New employers pay 3.4% for the first two to three years, with experience-rated adjustments after that.
- Employment Training Tax is an employer-paid 0.1% on the first $7,000 of each employee’s wages.
- State Disability Insurance is employee-paid through payroll withholding at 1.3% of wages with no taxable wage ceiling. SDI funds both disability benefits and Paid Family Leave.
You must also report all new hires to the state’s New Employee Registry within 20 days of their start date.27Employment Development Department. Household Employer’s Guide
Family, Medical, and Pregnancy Leave
California Family Rights Act
CFRA provides eligible employees up to 12 weeks of unpaid, job-protected leave per year for their own serious health condition, to care for a family member with one, or to bond with a new child. Unlike the federal FMLA, which kicks in at 50 employees within 75 miles, CFRA applies to employers with just five or more employees, and it covers a broader set of family relationships including grandparents, grandchildren, siblings, and adult children.28California Civil Rights Department. Family Care and Medical Leave: Quick Reference Guide To qualify, an employee must have worked for you at least one year and logged at least 1,250 hours in the preceding 12 months.
Paid Family Leave and Pregnancy Disability Leave
Paid Family Leave provides partial wage replacement for up to eight weeks within a 12-month period when an employee takes time off to bond with a new child, care for a seriously ill family member, or support a family member’s military deployment.29Employment Development Department. Paid Family Leave PFL is funded through SDI payroll withholding and does not provide job protection on its own; that protection comes from CFRA or FMLA when the employee qualifies.
Pregnancy Disability Leave is a separate entitlement. Employees disabled by pregnancy, childbirth, or a related condition get up to four months of leave per pregnancy. “Four months” means the number of working days or hours the employee would normally work during one-third of a year, roughly 17⅓ weeks, and it does not have to be taken all at once.30California Civil Rights Department. Pregnancy Disability Leave Fact Sheet A pregnant employee can stack PDL with CFRA bonding leave afterward, potentially producing about seven months of combined leave.
Termination, Layoffs, and Separation Agreements
At-Will Employment With Limits
California is an at-will state, so either party can end the relationship for any lawful reason without advance notice. You cannot fire someone for a discriminatory reason, in retaliation for exercising a legal right, or for reasons that violate public policy. Employees who believe they were wrongfully terminated can file complaints with the Civil Rights Department or pursue civil lawsuits seeking reinstatement, back pay, or damages.
California WARN Act
If you operate a facility with 75 or more employees, you must give 60 days’ written notice before ordering a mass layoff of 50 or more workers within a 30-day period, closing a plant that affects 50 or more employees, or relocating operations more than 100 miles away.31Justia Law. California Labor Code 1400-1408 – Relocations, Terminations, and Mass Layoffs That threshold is lower than the 100-employee trigger under the federal WARN Act. Notice must go to affected employees, the EDD, the local workforce investment board, and local government officials. Only narrow exceptions apply, such as a physical calamity or an act of war, and even then you must provide as much notice as possible.
What You Cannot Put in a Separation Agreement
The Silenced No More Act makes unenforceable any provision that bars an employee from disclosing information about unlawful acts in the workplace, including harassment or discrimination of any kind. If a separation agreement includes a nondisparagement clause or any other restriction on discussing workplace conditions, it must contain language making clear the employee retains the right to disclose information about unlawful conduct.32California Legislative Information. California SB 331 – Settlement and Nondisparagement Agreements You must also give the employee at least five business days to consult an attorney before signing, though the employee can voluntarily waive that period as long as the decision is knowing and not coerced.